Chinese smartphone brand Honor, formerly a sub-brand of Huawei, has launched a new subsidiary dedicated to chip design. This move comes shortly after rival company Oppo shut down its in-house chip unit and laid off numerous employees. The subsidiary, called Shanghai Honor Intelligent Technology Development Co, was established in Shanghai’s Lingang Free Trade Zone with a registered capital of 100 million yuan ($14 million). It operates under the ownership of Honor Terminal Co.

Honor

Honor’s New Chip Design Subsidiary

The primary focus of the new unit includes chip design, sales, related services, and the development of artificial intelligence (AI) application software. Honor has stated that the subsidiary will be one of its five research centers in China, with a particular emphasis on core software, graphics algorithms, communications, and photography. The other research centers are located in Beijing, Shenzhen, Xian, and Nanjing.

Although Honor has not explicitly confirmed whether chip development will be a part of the subsidiary’s activities, this move has garnered significant attention, especially following Oppo’s decision to disband its chip design team and release thousands of engineers. Oppo attributed the decision to uncertainties in the global economy and smartphone market, but speculations regarding non-financial factors, including US-China geopolitical tensions, have surfaced.

In contrast, Xiaomi, another major Chinese smartphone vendor, recently reaffirmed its commitment to chip development, considering it a crucial element of its core business that necessitates long-term investments.

Honor’s CEO, Zhao Ming, has stated that the company’s chip strategy will be determined based on specific requirements. He emphasized that the decision to pursue in-house development or collaborate with external partners will depend on the needs of their products. In March, Honor introduced its first self-developed radio frequency communication chip, the Honor C1, designed to enhance 5G signals. However, the company acknowledges that for more complex system-on-chip designs, collaborations with established suppliers like Qualcomm and MediaTek will be essential.

Established in 2013 by Huawei, Honor has rapidly gained popularity as one of China’s leading smartphone brands. It has expanded its presence to 20 international markets across Southeast Asia, Europe, the Middle East, and Latin America. In November 2020, Honor was sold to a consortium led by the government of Shenzhen, its home city, as a strategic move to evade US trade sanctions that have affected Huawei.

Despite a 14% decline in total smartphone shipments in China due to an economic downturn, Honor managed to increase its shipments by 30% to reach 52.2 million units last year. Consequently, its market share rose from 12% to 18%, trailing only behind Vivo, the sibling brand of Oppo.

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